Downgrading to Neutral
We are downgrading SPGI to Neutral. The share price has performed very strongly since we initiated in October 2015, outperforming the S&P500 by over 80%. However, looking forward we believe that revenue growth is likely to slow and margin expansion will be harder to come by. We forecast EPS growth of 10% in FY19 (in line with consensus), which means that a 22x 12-month PE multiple becomes more difficult to justify. In addition, our price target remains at $210, leaving less than 5% upside from yesterday's close. We are therefore downgrading the stock for valuation reasons.S&P Global is a provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. The company's segments include: S&P Global Ratings, which provides credit ratings, research and analytics; S&P Global Market Intelligence, which provides multi-asset-class data, research and analytical capabilities that integrate cross-asset analytics and desktop services; S&P Global Platts, which provides information and benchmark prices for the commodity and energy markets; and S&P Dow Jones Indices, which provides a variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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